Articles

ASEAN Celebrates a Crucial Partnership with the U.S.

By Morgan Caplan

The Association of Southeast Asian Nations (ASEAN), a 10-member regional organization that promotes economic growth, social progress and cultural development, celebrated its 50th anniversary and 40 years of relations with the U.S. at a gala dinner hosted by the US-ASEAN Business Council on May 25 at the Four Seasons Hotel featuring Commerce Secretary Wilbur Ross.

Together, the nations of ASEAN comprise the third-largest population in the world and boast the planet's fifth-largest economy, with a combined GDP of $2.4 trillion — not to mention the $5.3 trillion that transits through ASEAN member states each year, making the region a strategic hub of trade and security in Asia.

It is also a critical destination for the U.S. In fact, America exports over $100 billion in goods and services to ASEAN nations, with all 50 U.S. states exporting to the region.

“American exports to ASEAN nations already support nearly 500,000 jobs in the United States. And almost 42,000 U.S. companies export more than $100 billion in goods and services to ASEAN each year,” Commerce Secretary Ross said, calling it “a real win-win.”

“ASEAN member states are key diplomatic, economic and security partners for the U.S.,” he added.

Ross also noted that the council represents over 150 of the largest U.S. businesses in Southeast Asia.

At a time when the Trump administration is throwing up protectionist walls, the US-ASEAN Business Council tried to stress the mutual benefits of trading with this economically vital region.

The ASEAN economic community is America's fourth-largest export market, and the U.S. is the fourth-largest trading partner for ASEAN. On a per-capita basis, ASEAN buys two times the amount of American-made products as does China, and nearly 10 times as much as does India. In addition, the United States has a $8 billion dollar trade surplus with ASEAN in services.

Founded Aug. 8, 1967, in Bangkok, Thailand, ASEAN works to promote regional peace and stability and maintain cooperation among its 10 members. What began as a five-nation grouping of Indonesia, Malaysia, the Philippines, Singapore and Thailand has expanded to include Brunei, Cambodia, Laos, Myanmar and Vietnam.

Ambassador of Thailand Pisan Manawapat, left, chats with representatives of Chevron Corp at the US-ASEAN Business Council gala dinner that honored the strategic importance ASEAN is to the U.S. (Photo: U.S.-ASEAN Business Council)

“It is bound together by geography, history and a common purpose,” said Alexander Feldman, president and CEO of the US-ASEAN Business Council.

Along with its regional trade, ASEAN opened trade to countries such as India, Japan, New Zealand and South Korea with its free trade agreements. This region is a young one, with 60 percent of its combined population of 630 million under the age of 35. And with the world’s third-largest labor force, the council stressed that the ASEAN will continue to be a key global economic driver.

Feldman noted that as ASEAN also celebrates 40 years of official relations with the U.S., this partnership has grown stronger over the years through economic engagement and commitment to security, rule of law and development. In 2009, ties were further boosted when the U.S. signed the Treaty of Amity, which acknowledged the importance of ASEAN and its commitment to the partnership.

But this partnership — like many others around the world — has been tested by President Trump's “America first” agenda and his repeated vows to renegotiate or ditch multilateral free trade deals to preserve American blue-collar jobs. On that note, the president formally withdrew from the Trans-Pacific Partnership (TPP) shortly after taking office in January (also see “After U.S. Withdrawal from Trans-Pacific Partnership, Now What?” in the April 2017 issue of The Diplomat).

The sweeping trade accord included 12 Pacific-Rim nations, among them Canada, Mexico, Japan and Australia, that together represented around 40 percent of the global economy and a third of world trade.

While widely expected, America's withdrawal from the TPP disappointed allies in the region, especially those worried that China would step in to fill the economic void. Ross addressed some of these concerns, pointing out that Donald Trump was open to negotiating bilateral trade deals in the future, but the commerce secretary was also clear about where the administration's loyalties lie.

“Trade that is free and fair to American businesses and workers is the standard we are applying across the board. We are also guided by our view that the best way to improve the balance of payments and to stimulate the economy is to reduce barriers to American exports,” he said. “Most of you have expressed reservations about our withdrawal from the proposed Trans-Pacific Partnership. But the fact is, no matter who won the last election, there was simply not the political will on either side of the aisle for political ratification. But there were some good aspects to the TPP, and as we negotiate further agreements, our intention is to return some features such as market access to push others even further.”

U.S. Secretary of Commerce Wilbur Ross delivers the keynote address at the US-ASEAN Business Council’s annual gala dinner in honor of ASEAN’s 50th anniversary and 40th anniversary of United States relations. (Photo: U.S.-ASEAN Business Council)

Ross added: “The gains achieved in TPP need not backslide. One way to achieve this is to pursue multiple bilateral trade deals. We should be able to create symmetry so that each takes us to a similar place. And after all, we need to update existing trade agreements and frameworks in important areas like rules or origin, intellectual property rights and e-commerce.”

Over the past decade, ASEAN members' investment in the United States has increased by over 1,000 percent from $2.3 billion in 2004 to over $26 billion in 2015. U.S. foreign direct investment in ASEAN has also increased by an average annual rate of 12 percent since 2004 and amounted to a cumulative $274 billion, making ASEAN the number-one destination for U.S. investment in Asia, which is more than the U.S. private sector has invested in China, India, Japan and South Korea combined. U.S. investment in ASEAN is one of the key factors why ASEAN is also one of America's fourth-largest export markets. Through U.S.-ASEAN relations, Washington has also pledged to invest in renewable energy for ASEAN, which needs infrastructure improvement to maintain economic growth.

Johnson & Johnson, which was represented by Executive Vice President Sandy Peterson, is one of the many companies that are collaborating and investing in ASEAN nations. ASEAN places a high importance on health care, a service that Johnson & Johnson provides in the region, offering access to basic health services and medicines.

“We believe that government should not be a barrier to innovation or to investment,” Ross said. “It is our role in government to create the environment in which business prospers, jobs are created and economic growth is sustained. Our trade policy is key to those efforts.”

As the partnership continues to grow, one of the major interests for this relationship is how President Trump will continue with the ASEAN partnership. In the past, former President Barack Obama was active in increasing U.S. participation in ASEAN activities, with initiatives such as the U.S.-ASEAN annual summit.

Already, the Trump administration and Congress have recognized ASEAN’s importance through the creation of the ASEAN caucus in the House, as well as the upcoming visit of Vietnamese Prime Minister Nguyen Xuan Phuc to D.C. Ross also noted that President Trump will participate in the East Asia Summit later this year and the US-ASEAN Summit in the Philippines in November.

“As we gather to mark the 50th anniversary of ASEAN’s founding, we are encouraged by the strong support for ASEAN from both the Trump administration and the U.S. Congress,” said Feldman.

“Vice President [Mike] Pence’s successful visit to Indonesia for talks with both the government of Indonesia and the ASEAN Secretariat earlier this year; Secretary of State Rex Tillerson’s meeting with his ASEAN Foreign Affairs counterparts earlier this month; the announcement that President Trump will attend all three major Asian summits hosted in ASEAN in November; as well as the formation of the Congressional Caucus on ASEAN, all highlight the important role that ASEAN has played in at the start of the Trump administration and the 115th Congress.”

Morgan Caplan is an editorial intern of The Washington Diplomat.

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